Gov. Asa Hutchinson on Tuesday (Oct. 17) sought to lay aside rising fears that President Donald Trump’s decision last week to end federal cost-sharing reduction payments to insurance carriers would hurt the more than 300,000 individuals who receive health care under the state’s popular Arkansas Works program.
“It is really important to emphasize that Arkansas Works is not in jeopardy because of this latest decision (by President Trump). We’ve looked at it over the weekend and we’ve looked at the legal analysis, and the cost reduction of those cost-sharing payments will not adversely impact Arkansas Works …,” Hutchinson told reporters during a pen-and-pad session at his office in the State Capitol.
The informal State Capitol press conferences came less than a month after Hutchinson held a similar meeting in mid-September to announce he was putting his support behind the Graham-Cassidy bill to “repeal and replace” the Affordable Care Act passed by former President Barack Obama.
However, that bill failed to gain support in the U.S. Senate, leading President Trump to sign an executive order on Thursday he said would increase healthcare choice and competition by halting cost-sharing subsidies in the individual marketplace under ACA, informally known as Obamacare.
Trump’s executive proposals also allow the purchase of insurance across state lines and the expansion of associated health plans to small business owners. The president’s decision also led U.S. Health and Human Services Acting Secretary Eric Hargan and Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma to announce that the cost-sharing reductions payments will be discontinued immediately based on a legal opinion from the U.S. Attorney General.
MEDICAID FUND TO OFFSET RATE HIKES
In the wake of the president’s announcement and CMS’s subsequent guidance, Hutchinson’s office on Friday said it instructed the state Insurance Department to allow the three qualified insurance carriers in the Arkansas healthcare marketplace to resubmit their so-called “Silver Plan” rate requests to reflect the Trump administration’s policy change.
In his 30-minute talk with reporters Tuesday, Hutchinson said there are 4,000 individuals in Arkansas who buy insurance on the federal marketplace that make over 400% above the federal poverty line who will be impacted by the president’s executive order.
“Because of that reduction in payments, their rates are going to go up, and that is not good for Arkansans,” the governor said. “That is an impact we can’t avoid, it is a reality and it is going to hurt people.”
However, after studying the president’s executive order over the past several days, Hutchinson said although health insurance premiums from Arkansas Blue Cross, Ambetter and CHI-QualChoice are likely to rise when open enrollment period begins on Nov. 1, the state’s own cost-sharing program will be able to offset those expected rate hikes through the state’s Medicaid budget.
At the end of September, Hutchinson said the state still had more than $36.5 million in Medicaid cost-sharing funds that won’t be impacted by the president’s executive order. He said the state has the authority to use those funds, and advised the insurance carriers over the weekend that the reduction in the federal cost-sharing payments will not impact subsidies for Arkansas Works.
“Nobody knows the future, five or 10 years from now, but it is very important to give confidence to all those who are dependent upon Arkansas Works and the stability of that program,” the governor said. “We will continue to fight for any changes in Washington to be consistent with Arkansas Works because again 300,000 are dependent upon it and it is a system that is working well for our state.”
Hutchinson also said state Department of Human Service officials still await word from the Trump administration officials on approving a Medicaid waiver request submitted in March to continue Arkansas Works reforms passed by the state legislature earlier this year. Those waivers, which must be approved by CMS, would cap income eligibility at 100% of the federal poverty line. Hutchinson said that change would reduce the number of beneficiaries by 20%, or about 60,000 individuals.
If the waiver goes through before the end of the year, individuals with higher incomes would move to the federal marketplace, where they could keep the same plan or choose a different one. They would also be eligible for federal subsidies but not federal and state funding, as is the case now. Under the terms of a 2016 waiver provided by the Obama administration, recipients in the 100%-138% range pay a $13 fee to the state and owe a debt to the state if they fail to do so. Under the new waiver, they would pay up to 2% of their income for insurance, which they could lose if they don’t pay.
Ray Hanley, president and CEO of the Arkansas Foundation for Medical Care (AFMC), said he hopes the Trump administration approves the Medicaid waivers for Arkansas Works. He said AFMC will help with the coordination and education of the “conservative reforms” that some will oppose.
Arkansas Democratic Party Chairman Rep. Michael Gray, D-Augusta, issued a statement Tuesday saying Gov. Hutchinson “glosses over” the damage the executive order will deliver to Arkansas.
“As the National Governors Association has already done, Governor Hutchinson should call on President Trump to immediately remedy this irrational, nasty executive order because it was a big, big mistake. It is time for the Republican leadership in this state to put Arkansas first and stop indulging every whim from this reckless President,” Gray said in his statement.
TRUMP TWEETS, HIGHWAY FUNDS
In responding to questions from reporters, Hutchinson downplayed concerns that Trumps’ executive orders and tweets over the weekend could undermine the stability and future of Arkansas Works when the legislature looks to re-authorize the program again in 2018.
“If panic ensues that Arkansas Works is not sustainable because of the president’s actions, then sure we got problems with the re-authorization, but that is not based on real facts. So, it is important that the right information gets to the public, to legislators and policymakers …”
Hutchinson also called President Trump’s tweets hastening the failure of Obamacare “an unusual political dynamic.”
“His strategy just appears to be ‘repeal it’ without a solution, and that’s what I said is never a good policy direction. I supported Graham-Cassidy because it is a repeal, but it is a replace for something that works for Arkansas. Whenever you are dealing with 300,000 Arkansans, then we have to have a plan for the future – it just can’t be disruption.”
At the beginning of his media availability, Hutchinson also addressed discussion by some state lawmakers in recent committee hearings on how the state will pay for long-term highway needs. During a special session in 2016, the legislature approved the governor’s plan to tap general revenue, state surplus and rainy-day funds to come up with $50 million per year to qualify for $200 million in federal highway money available under a five-year program.
More recently, Hutchinson said some lawmakers and policymakers discussed diverting sales taxes from new and used cars or batteries that he said would create a $300 million to $500 million “revenue hole” to pay for future highway construction and repairs.
“Those are funds that are necessary for education, for public safety and for all the other needs of our state, so I say ‘no’ we cannot divert that general revenue stream that is need for education, higher education and other needs over the highways,” Hutchinson said. “That is an important principle that bears underlining that I am emphasizing today as different groups look at a new highway plan for the future.”
Hutchinson also reiterated his past opposition to raising taxes for future highway needs, but said he was not opposed to a ballot issue to fund future road construction if supported by a majority of Arkansas voters.